HONG KONG (REUTERS) - Asia-focused insurer AIA Group Ltd posted its smallest ever quarterly growth in new business value, as anti-government protests in Hong Kong hit sales of insurance products to mainland Chinese visitors.
AIA and other insurers in Hong Kong get a large share of their sales from selling insurance products to China visitors who are seeking better products and overseas investment opportunities.
Anti-government demonstrations in the Chinese-ruled territory, which began in June, have resulted in a sharp drop in tourist arrivals, mainly those from the mainland, hitting sales of luxury goods and insurance policies, among other things.
On Sunday, the protesters set fire to shops and hurled petrol bombs, after riot police fired tear gas, water cannon and rubber bullets to disperse thousands in the Tsim Sha Tsui harbour-front hotel district.
Hong Kong-headquartered AIA on Monday joined other companies to flag concerns about the impact of the protests on domestic business activities, with the city facing its first recession in a decade.
"Some of our markets are experiencing headwinds from the lower interest rate environment, falling consumer confidence and rising political and trade tensions," the company said in its earnings statement.
"In particular, the reduced numbers of Mainland Chinese visitors to Hong Kong continue to affect sales." AIA reported on Monday that overall new business value grew 1% to US$980 million in the three months to Sept. 30, which was better than some analysts' expectations, sparking a rise in the company's shares.
Excluding Hong Kong, new business grew 14 per cent, with mainland China emerging as its "fastest-growing" market in the quarter, the insurer said.
AIA posted a double-digit decline in value of new business (VONB), which measures expected profit from new premiums and is a key indicator of growth, in Hong Kong, the insurer said.
"Double-digit VONB growth from domestic customers was offset by a decline in VONB from Mainland Chinese visitors which broadly tracked the reduction in overall visitor arrivals to Hong Kong reported in July and August," it said.
The company did not elaborate on its Hong Kong numbers in the statement.
The insurance firm, whose business was first established in Shanghai nearly a century ago, now has a presence in 18 markets in the Asia Pacific. Hong Kong accounts for the biggest share of its new business.
Besides Hong Kong, AIA counts Australia, China, Indonesia, Malaysia, Singapore and Thailand among its other major markets.
Shares in AIA rose as much as 4 per cent after its results despite the insurer's tepid quarterly performance. The stock had fallen 12.1 per cent in the July-September quarter, amid investor worries about the impact of the protests on its business.
Daiwa Capital Markets analyst Leon Qi said that the overall numbers were better than market expectations. Qi said he had expected the value of new business to drop 2 per cent due to the pressure on its Hong Kong business.